One of the things that you have to take into account when you offshore something as intricate and risky as software development is the inherent stability of the place you’re offshoring to.

As this article in the EE Times mentions, geopolitical turbulance can be troublesome and can present many obstacles for successfully getting a project out the door.

My motivation for writing this comment is that while India and Pakistan may be good options, so is South Africa. I work in the offshoring industry at large, and it seems that literally everyone is going to India for obvious reasons – but whichever way you cut it, there are other factors to consider when taking something offshore, other than just the cost.

What is the project management component part of the project, relative to the actual software development?
How long is testing going to take?
Is the currency stable?
Are you hedged against that currency?
Is the business you’re contracting your project to stable?
Have you credit checked them? Do they have other long term projects, which therefore offer you peace of mind?

My vested interest is that South Africa’s economy is relatively stable, and it’s stable exchange rate provides an attractive option for overseas businesses and investors to take advantage of. While South Africa may be in a political hotbed, with Zimbabwe being the most obvious sore thumb, it’s unlikely anyone is going to declare war on us, nor drop bombs on Johannesburg or Cape Town – if anything, if there is a drop in the exchange rate, it makes for a more lucrative investment as you stand to get more bang for your buck – the fact remains that the government is still stable, and the country is stable.

While it’s tech industry is not as large as India’s, and it’s population is nowhere near as large as India’s nor Pakistan, it is an option to consider, and one worth discussing with your colleagues.

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10 comments

Hallo,

I am a master student and i am doing my master thesis in offsourcing and offshore software development in africa. Could you please help me with as much information as you can, either in form of web links, articles or reports, anything will do.

On this side of the pond, the NY Times had a feature the other day on skills shortages in India. Coupled with the Economist’s recent feature on the “Search for Talent”, I think the dust is settling, and people are realizing what’s common sense: good people are always hard to find. (Which might lead one to conclude that the US should start taking its public education system a little more seriously, but that’s another story !)

Having seen the offshoring from the US and in India, I can say that the main problems for India are the following:

1. Infrastructure – It may not be as big a problem in software as in manufacturing, but it remains a problem. For instance, a place like Bangalore is difficult to attract companies due to the crowded roads making it difficult for people to work there.

2. Talent – While India might have a lot of people, good people are hard to find and harder to retain. It is estimated by my company that this factor increases the cost substantially.

I would suggest that for more difficult problems like high end algorithms to go to India and look at other options for low end stuff.

I do not think that Pakistan is qualified to be compared to India, just as India cannot be compared to China in manufacturing. While their growth may be high, they do not have the required number for work like search engines. That kind of work requires a lot of trained people, which cannot be found in Pakistan, Phillipines or Vietnam. Law and Order is another reason why people prefer India to Pakistan. In fact, people choose some states in India for this reason, apart from reliable power, roads, universities and readiness of people to cut the red tape for incoming investments.

Some good points which need to be considered, and in my experience the weighing up of all of these factors when considering an offshore partner is probably the hardest thing that can be done. Certainly not the easiest!

My advice is always to start small and then to go larger with outsourced work, so that you limit your risk. When you do find an outsource gem, stick with them!

I think Vietnam is going to be a powerful force in IT outsourcing — fast!!
I went to school with a lot of brilliant Vietnamese students in Canada and I have crazy respect for their science/mathematical aptitude. One of my best friends moved back to Hanoi and I’m trying to get her to seriously look into starting up an IT firm there where I can pass future projects on to her. Stay tuned!

I agree with Prakash, Pakistan is not qualified to compare with India in Software outsourcing, one Pakistan did not produce enough qualified candidates and another major factor was its stability, law and order. But we spent enormous amount of resouce and time to build an excellent team of developers in Islamabad, the best practice we think is have a project manager or some time a lead developer working from our main office in Naperville (A suburb of Chicago). Though this may sounds like an expense but a hybrid model always reduced time and same time produced quality of work.